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The following information relates to the operating performance of two divisions of SAIL, for last...

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Accounting

The following information relates to the operating performance of two divisions of SAIL, for last year:
Bokaro Division () Durgapur Division ()
Operating Profit 8,00,00012,00,000
Total Assets (based acquisition cost)40,00,00075,00,000
Total Assets (based on current replacement costs)60,00,00080,00,000
(a) Compute the return on investment (ROI) of each division, using total assets stated at acquisition cost
as the investment base.
(b) Compute the ROI of each division, using total assets based on current replacement cost as the
investment base.
(c) Which of the two measures do you think gives the better indication of operating performance?

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